If you are starting a business in Dubai, UAE, you are already aware that a foreign investor needs to find a local sponsor. A local sponsor will own the maximum, i.e., 51% of shares in the business, while the foreign investor will own the remaining 49%.
However, the sponsor’s involvement in running the business is minimal. For an annual fee, most sponsors sign away their power of attorney to the foreign investor.
Still, situations can arise that warrant a change in local sponsors for a company.
But first, let us understand the responsibilities of a local sponsor for your business in Dubai.
- Cancellation of employee work visa
- Cancellation of the labor status for employees
- Closing the bank accounts
- To resolve any outstanding debt if there is any
- Deal with the government officials and Ministries on behalf of the businesses and also facilitate the renewal procedure
- Translating the business contracts for company registration that are in Arabic
Coming back to the procedure of changing your local sponsor, we have listed down a few things you can do to change your local sponsor in Dubai.
Speak with your Current Local Sponsor
If there is a conflict between you and your current local sponsor, the first thing to do is resolve the matter first. But if it still doesnt work, you can change the sponsor, hopefully with the cooperation from the current sponsor. Mediation, and even informal discussions, can help all the parties work through their matters and reach an agreement. If your current sponsor refuses to agree to a change in sponsorship, you may need legal assistance to pursue the matter.
Gather Important Documents
For a smooth change of local sponsor, foreign investors must present certain documents to the court. These documents include but are not limited to a Memorandum of Association (MOA) between the foreign investor and local sponsor, a power of attorney, and receipts of annual sponsorship payments.
Submit the Documents at the Court with your Current Sponsor
Once you have your documents and your current sponsor agrees to the change, you will meet at the court where an official will review your documents and confirm your current sponsor’s approval. Then, new documents, including a revised MOA and trade license, will be issued for your company to show your new sponsor.
How can Commitbiz help you?
We, at Commitbiz, handle all your local sponsor related requirements completely so that you can concentrate on your business growth! Contact us today for our services in the UAE.
Our consultants can also help with business incorporation, office space IP, pro services, accounting, and bookkeeping, and corporate secretarial services in the UAE.